l.3 Session 1 - Handout Market Types
l.3 Session 1 - Handout Market Types
l.3 Session 1 - Handout Market Types
Handout litrendshoe.co
GABRIELLA JASMINE - CEO
Market Types FADILAH ALDO ALIMUDIN - COO
GABRIELLA AURELIA N.O. - CFO
MARIA MONICA HILLERY M.A. - CMO
Context
In the previous activity, you learned the differences between a customer and a consumer. Here, you will
understand the different types of markets with the help of a class discussion.
Instructions
1. This is a class discussion.
Foundational Course in Entrepreneurship
2. Go through the 4 market types explained in this handout. You get 10 mins for this.
3. Then, read through the scenarios and identify the market type for each.
4. Discuss the scenarios given at the bottom of this handout.
5. The class discussion will be for 20 minutes.
What makes ventures succeed or fail? According to Steve Blank, “90% of ventures fail due to self-destruction
and not competition”. Entrepreneurs need to evaluate a few options based on market size and decide the type
of venture they want to start and their risk-taking appetite.
It is important that you understand the type of market you choose for your venture. The market type you
choose will impact multiple aspects of your business including:
Market size
Sales model
Funding necessary for the venture
Customers and how much time will it take to adopt them
Competition
Risks
Not knowing what type you can cause challenges in future. Moreover, the market you choose will determine
the type of venture you are. Take a detailed look at each market type.
1. Existing Market
When investors and entrepreneurs go after an existing market – the advantage is that there’s little or no
market risk. In this market type:
Competitors exist
Customers want and need better performance
Technology is usually the driving factor
The positioning is driven by the product and how much value customers place on its features
Foundational Course in Entrepreneurship
2. New Market
In this market type:
For a new market to take off, there are many things that you need to consider. For example, who is the
customer? and what customer pain/problem are you trying to solve?
3. Re-segmented Market
The Re-segmented market is a hybrid between a New market and an Existing market in the sense that it is a
New Market created from a small segment from an existing market.
Low cost
New Niche
Evaluate factors that your industry has long competed on and eliminate those
Evaluate what factors can be reduced well below the industry standards
Evaluate what factors can be increased above the industry standards
Evaluate what factors can be created that have never been offered
There is a bit of a chasm in this type of market
For example, Southwest airlines took on the airline industry by bringing up the traditional hub-and-spoke
model and providing just very limited services but for an extremely low price.
Foundational Course in Entrepreneurship
4. Clone Market
In a Clone market, customers are known because you copied an existing market. It is called a Clone because, in
this market type, you are going to localize all those specific issues for your country or region. That said, it takes
a foreign business model and adapts it to local conditions.
There are no competitors if you are the first one and the risk may be in misjudging the local needs. This market
type:
Adapts a foreign business model to a local condition (language, culture, import restrictions, and local
regulations)
Needs a large number of customers, typically >100 million
Market Are the What does the Associated Risks Competitors Examples
Type Customers Customer
known? Need?
Lack of branding,
Existing Market Known Performance Many Amazon
sales & distribution
Source: https://guides.co/g/how-to-build-a-startup/3017
Are you now clear about the different market types? Look at these scenarios. Which market type are these?
Your facilitator will run a class discussion around these scenarios.
Scenarios
1. Care.com: It is an online marketplace to find babysitters. What kind of market is it? Resegmented market
2. Chewy.com: It is an e-commerce company for pet food. What kind of market is it? Existing market
3. Amazon: It started out selling books. What kind of market is it? Existing market
4. Globaltranz: It is an online freight broker for trucking capacity. What kind of market is it? Resegmented market
5. SpaceX: SpaceX designs, manufactures, and launches advanced rockets and spacecraft. What kind of
market is it? Existing market
6. Twitter: Twitter ventured into micro-publishing. What kind of market is it? Resegmented market
7. Groupon: It is in the daily deals market. What kind of market is it? New Market